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FERC Inquiry on Natural Gas Reliance

WASHINGTON (February 12, 2013) – Tomorrow, Federal Energy Regulatory Commission (FERC) will hold a meeting with officials from electricity generation companies, gas pipeline companies, utilities, and electricity system operators to discuss the vulnerability of the electric system due to over-reliance on natural gas, when the weather is especially hot or cold. The meeting is part of a year-long process FERC initiated to look into the problem.

Below is a statement by Mike Jacobs, an electricity markets senior analyst at UCS.

“The electricity producers are making decisions based on short-term economics, which poses serious risks to consumers and the economy. The Federal Energy Regulatory Commission is concerned that the way the market is working today may not guarantee reliability or prevent long-term price increases.

“Electricity generating companies are increasingly relying on natural gas to produce power, but they haven’t invested in the additional pipelines to deliver enough gas to their power plants. Pipeline operators may soon have to choose whether to supply gas to generate electricity or to heat peoples’ homes. The northern parts of the country are facing a real risk of rolling blackouts or limits on home heating. This risk is acute for New Englanders in the winter since 52 percent of their electricity comes from gas. Florida feels the squeeze in the summer when its air conditioning depends on natural gas, which supplies 60 percent of its electricity.

“When supply cannot meet demand, the risks go beyond increasing costs. This inquiry shows there are risks of blackouts from over-reliance on natural gas. Investing in energy efficiency and diversifying the electricity mix with truly clean energy resources like wind and solar power will help ensure reliability and provide a hedge against natural gas price increases. The cost of operating a renewable energy plant once it is built is almost nothing because the fuel – the wind and the sun – is free.”